A leader in the international business payments industry, at UniTeller we track the latest trends, develop strategic partnerships, and deliver powerful B2B payment solutions for our clients.
While the payments ecosystem is constantly evolving, our mission remains the same: to move money to individuals, communities, and businesses around the world—in real-time.
As we promote innovation and growth, we believe it’s vitally important for users to understand the breadth of international business payments: what they are, how they function, and which payment methods are available.
Today, we’re going to explain the ins and outs of the industry with this complete guide to international business payments.
What Is An International Payment?
An international payment constitutes any financial transaction where money is sent from one country to another.
International payments can occur within the same time zone, as between a corporate entity in New York City and a customer in Montreal.
Conversely, international payments can also occur overseas, as between a buyer in Rio De Janeiro and a seller in Osaka.
Also known as “cross-border payments,” international payments include all personal, business, and federal (i.e. government-sponsored) transactions.
6 Types of International Payment Methods
There are many international payment methods to consider.
Here is a comprehensive list of the most popular cross-border payments on the market.
As the name implies, cash-in-advance is a form of pre-payment.
In most cases, the buyer pays the seller before the goods are shipped. For example, an art dealer in Detroit might pay an artist in Paris before his paintings are put in the mail.
Cash-in-advance payment methods come in many forms, including:
- Credit cards.
- Prepaid debit cards.
- Wire transfers.
- Paper checks.
While cash-in-advance is ideal for sellers, it can pose a moderate risk to buyers. After all, they have no guarantee of receiving their merchandise on time (or in the condition promised).
2. Letters of Credit
While cash-in-advance remains popular, it’s not always the ideal choice for businesses.
As we mentioned, buyers have little guarantee that they will receive their purchased goods, or that they will even be delivered according to contract requirements.
Of course, sellers have their own concerns. Without prepayment, the buyer could receive the delivered goods and decide not to pay.
That’s where letters of credit can help.
In short, a credit letter is an official bank document that guarantees the buyer will pay on time. To secure the guarantee, banks require some type of liquid collateral (i.e. cash) from the buyer before issuing a letter of credit.
If the buyer ignores his obligations, the bank will complete the payment and seize the buyer’s money.
Though letters of credit can be expensive, they help give buyers and sellers confidence with international trade dealings.
3. Open Account
In an open account transaction, merchandise is shipped before payment is due.
The polar opposite of cash-in-advance, an open account payment actually requires the goods to be delivered before payment is provided.
In fact, the goods can be shipped up to 90 days before the buyer must finally pay.
While this method clearly benefits buyers, many sellers embrace it in an attempt to beat local competitors by providing more attractive terms.
Therefore, some sellers will extend generous credit to buyers (while pursuing additional protective methods against potential delinquency or theft).
4. Wire Transfers
Though technically a form of cash-in-advance, wire transfers deserve special mention.
After all, the wire transfer revolutionized global payments when it was invented in the 1870s.
And what is a wire transfer? It’s the electronic delivery of funds from one bank account to another.
Today, wire transfers rank among the most secure (and convenient) cash-in-advance options.
Though they do incur transaction fees, their reliability often mitigates the upfront cost.
Wire transfers sent to other countries have a unique name: remittances. In most cases, a remittance is regarded as a financial gift sent to friends and relatives overseas.
Where domestic wire transfers involve two banks, an international remittance includes a third party in each transaction. This liaison is often known as a remittance transfer provider or money transfer operator (MTO).
By charging a small fee, the remittance provider ensures secure and timely delivery between the originating and receiving banks.
6. Automated Clearing House (ACH)
ACH networks process large batches of debit/credit transactions. Like wire transfers, ACH payments are handled electronically via bank-to-bank money transfers. As such, they are convenient, secure, and affordable.
However, unlike a wire transfer, ACH payments involve a third-party processor that mediates between banks.
In the United States, direct deposit is a popular application of ACH technology. In fact, over 93% of American workers get paid via direct deposit.
Thanks to recent innovations, global ACH now empowers many countries to enjoy similar benefits. While international ACH can take up to several days to clear, it remains an affordable option for cost-conscious countries.
How Do International Payments Work?
International payments are constantly moving around the world.
In 2022, customers paid global businesses roughly $2.8 trillion, while B2B cross-border payments exceeded $150 trillion. Though the statistics are staggering, the journey of each transaction is rather simple—especially with UniTeller Business Payments.
In fact, there are only three steps needed for our B2B payment solution to connect businesses around the world.
Payment starts with senders, including banks, fintechs, telcos, corporations, or MTOs (money transfer operators).
Individuals are also included in this part of the process.
The payments—whether B2C, B2B, C2B, or P2P—are securely entered into UniTeller’s payment gateway API.
After receiving the funds, UniTeller begins preparing for payout.
Our end-to-end solution deftly manages complex issues including:
- Foreign exchange (FX) settlement.
- Anti-money laundering (AML) and compliance protocols.
- Transaction screening.
UniTeller’s approval process is applied to all payment types. In fact, even smaller amounts like gift cards and bill payments are rigorously analyzed and secured, so as to prevent any potential fraud or delay.
As always, we leverage our global network of financial institutions and strategic partnerships every step of the way.
After processing is complete, the payment is ready for payout.
The transaction is then directed to the intended payment institution, including banks, fintechs, telcos, MTOs, and retail agents.
As you might expect, there are many potential channels available for delivery. At UniTeller, we proudly provide a full suite of payout destinations, including:
- Bank accounts
- Bill payments
- Mobile wallets
- Business payments
In some countries, we can even provide home delivery to customers.
With UniTeller, our B2B payment solution empowers you to send or receive payments almost anywhere in the world.
Plus, you can have confidence that it will be delivered safe and sound in just a few short business days.
International Payment FAQs
While international payments are powerful, they can also be a little overwhelming.
Here are some answers to the most pressing questions.
How much does an international business payment cost?
The exact cost varies depending on your provider and preferred method of payment.
For example, a global ACH payment will generally cost less than a letter of credit.
Nevertheless, most international payments will incur a range of fees for the initial transfer, the currency exchange, and the intermediaries involved.
That’s why it’s important to read the fine print and know which fees are in play, and
leverage a payment platform built to reduce costs at every touchpoint.
How do I determine the foreign exchange (FX) rate?
Most payment providers will set their own rate (independent of the market).
Whether you use their website or mobile app, the exchange rate should be clearly displayed before any purchases are made.
While many providers offer a competitive rate, we encourage you to stay aware of market trends so you can always find the best deal.
Here is a free, real-time currency converter.
Do international payments take longer than domestic payments?
Yes. Because domestic payments involve fewer intermediaries, they often complete transactions in just one or two business days.
However, while domestic payments are often faster, international payments are quickly gaining ground in both speed and efficiency.
How long does an international business payment take to complete?
Most international payments arrive within one to five business days.
Once again, the exact transaction time will depend on your chosen payment method and provider.
For example, our uLink remittance clients (P2P) can transfer money overseas in minutes when they use a credit or debit card.
Q: Are international business payments secure?
Yes. Thanks to advanced security protocols, international payments are very safe.
In fact, there are two security methods worth your attention: encryption and tokenization.
Encryption ensures that customer data is fully immune to tampering or theft, while tokenization replaces payment details (like a bank routing number) with unique symbols that have no inherent value if compromised.
Alongside authentication tools, these protocols combine to eliminate customer exposure at every point of a transaction.
International Payments Glossary
The international payments ecosystem is vast.
As you explore payment providers and methods, there are many terms that you’ll likely encounter along the way.
Presented in alphabetical order, here is a brief glossary of international payments:
Automated Clearing House (ACH)
ACH payment is an electronic bank-to-bank payment.
As the name implies, ACH transactions are completed through a “clearing house:” a third-party mediator that facilitates the exchange of payments between buyers and sellers.
While ACH is commonly used in the U.S. for direct deposits, global ACH is also available for international transactions.
Though domestic payments generally take one day to process, global ACH requires up to five business days to complete.
Bank Identifier Code (BIC)
A bank identifier code (BIC) is an 8-11 character number used to identify global banks and financial institutions.
BIC codes ensure that money transferred between banks arrives in the intended destination.
Note: As we will discuss below, BIC and SWIFT codes are used interchangeably.
A beneficiary is the end user who receives the funds that you’re sending.
In some cases, the beneficiary is also referred to as the recipient.
Note: A beneficiary can be either a person/individual or a company/entity.
Clearing House Interbank Payments System (CHIPS)
CHIPS is the world’s largest private-sector money transfer system.
Primarily used for large-value banking transactions, CHIPS clears and settles $1.8 trillion in domestic and cross-border payments every day.
Foreign Exchange (FX)
Foreign exchange (FX) is the conversion of one country’s currency to another.
For example, FX shows the exchange rate of the US dollar (USD) to the Mexican peso (MXN), among other possible combinations.
Foreign Exchange Market (Forex)
Forex is a global marketplace where foreign currencies are actively traded.
The Forex market is open 24 hours a day, five days a week and has a daily trading volume over $6 trillion.
International Bank Account Number (IBAN)
An International Bank Account Number—or IBAN—is used to identify a foreign bank account.
Combining up to 34 alphanumeric characters, an IBAN code is used whenever money is sent between two international banks.
IBANs are most commonly used in the European Union. While U.S. banks do not have IBAN codes, they do use the system to process outbound foreign transfers.
Know Your Customer (KYC)
KYC guidelines protect banks against fraud and corruption.
Though KYC contains several regulatory features, its primary use is in identity verification of clients. That’s why KYC plays an integral role in global anti-money laundering (AML) and countering the financing of terrorism (CFT) protocols.
Money Transfer Operator (MTO)
An MTO facilitates the fast and efficient transfer of money from one location to another.
uLink, a world-leader in remittance services, is considered an MTO.
In most cases, MTOs must be fully licensed and regulated to provide financial services.
Society for Worldwide Interbank Financial Telecommunications (SWIFT)
Based in Belgium, SWIFT is a vast messaging network used by leading nations around the world.
The Society for Worldwide Interbank Financial Telecommunications provides members with a SWIFT code, which is used to identify global bank branches.
While European nations primarily use IBAN codes, many western nations—including the United States and Canada—are members of SWIFT.
Note: SWIFT codes are used interchangeably with Bank Identifier Codes (BIC). They are the exact same codes and provide an identical service.
A wire transfer electronically transmits money between people and businesses.
While the process often incurs a fee, a wire transfer enables the direct flow of money from one bank account to the next.
Unlike an ACH transaction, a wire transfer does not involve a third-party mediator.
Note: Wire transfers are synonymous with bank transfers and credit transfers.
The Gateway to International Business Payments
In the business world, payments are essential.
Whether you’re receiving funds or paying vendors, modern companies need an efficient, reliable, and secure way to handle cross-border payments.
That’s where UniTeller’s Business Payments can help.
By accessing business payment solutions, you can streamline international payments across B2C, B2B, and C2B markets.
Businesses can offer seamless business payments to their customers with our white label turnkey B2B payment solution.